Master data management: looking beyond the single view to find the

April 2007

Master data management: looking beyond the single view to find the right view.

Master data management: looking beyond the single view to find the right view.Page �

Contents

2 Introduction

3 Understanding the issues

4 The problem with silos

5 Current solutions have their

limitations

7 Master data management: the

“right” view of master data

9 Master data management

at work

10 Potential benefits can extend

across the enterprise

10 Is master data management

the right view for your

organization?

11 Taking the first step

12 Conclusion

Introduction

The only constant in business data is constant change. On average, 14 percent of the nation’s population changes addresses each year,1 render-ing customer information in countless databases obsolete. And that’s just for starters. These same customers change jobs, swap credit cards, open new bank accounts, get divorced, make new purchases, change phone numbers, make payments and get married. This constant change holds true as well for patients in healthcare, citizens in government and prospects tracked by the salesforce.

If changes such as these are not accurately reflected in an organization’s data records—and pushed out to all the systems and processes that depend on those data records—the organization can pay a high price.

Incorrect or duplicated customer information costs corporations more than US$600 billion annually.2 For example, in 2007 alone, poor quality data will cost the insurance industry US$14 billion and the banking industry US$27 billion in operating costs.3,4

The problem is widespread. Roughly half of 750 companies surveyed in late 2005 reported incurring losses, problems or costs due to poor quality data.5 Over the last decade, organizations have come to realize that they need a single view of the master data on which their business, and their business decisions, is based. This master data includes a heterogeneous mix of customer infor-mation, product information, agreements and accounts, vendor and supplier information and inventory information—all generated and currently stored in line-of-business systems throughout the organization.


Highlights

Ineffective management of master

data has both day-to-day and

longer-term ramifications.

There is, however, a significant flaw in the “single” view approach to managing master data. Given the organic way in which most organizations’ information systems and IT infrastructure have grown to meet changing business needs—not to mention the reality of information silos, legacy systems and multiple infor-mation architectures—a literal single view of master data has proven virtually impossible to achieve. As organizations reorganize, merge, acquire new business units and grapple with new security and compliance regulations, master data management problems are only becoming more pressing.

For many organizations, the answer may lie not in master data aggregation (the “single” view) but rather in master data management—which offers a multiview approach to achieving the “right” view. By using a unified understanding of data to implement a series of changes to architecture, systems and processes that allow for automatic collection, dissemination and validation of the data stored in vari-ous places, organizations can help assure that their master data is consistently presented in the right view, to the right people and processes, at the right time.

Understanding the issues

In a recent survey, more than half the companies participating said that design-ing business processes that utilize real-time data would be a strategic priority for the coming year. Other priorities included enhancing customer service and customer satisfaction.6 Proof that organizations in all industries, all across the world, are grappling with data management issues. The more essential the data is to the core of the business—what is called master data—the more crucial a viable solution becomes.


HighlightsThe day-to-day ramifications of the lack of effective management of master data can be costly, including:

• Reducedcustomersatisfactionduetoincomplete,out-of-dateor

incorrectdata

• Inabilitytobringnewproductstomarketquickly

• Depletedoroverstockedinventory

• Wastedpostageduetoincorrectaddresses

• Lossofrevenueduetobillingerrorsandlostopportunity

• Lostmanufacturingtimeduetoinaccuratepartsordering

• Regulatoryfinesduetononcompliance.

Perhaps even more costly are the long-term ramifications of ineffective manage-ment of master data. These include the inability of the organization to respond quickly to changing business requirements, increased risk and higher than nec-essary IT costs. Also at stake is the organization’s ability to maintain its customer base and competitive edge, due to inaccurate or unavailable information.

What is master data?

Master data is data that describes one or more attributes of core business entities such as customers, suppliers, locations, products and inventory.

The problem with silos

A major contributor to many an organization’s master data woes is the infor-mation silo. In many organizations, master data is distributed across numerous self-contained, or siloed, systems. Customer service has its system, manufactur-ing its system, procurement yet another system. Even within a single business unit, there can be numerous front- and back-office systems that contain data critical to the business, but do not normally share that information with other systems. It is this compartmentalization of data within often incompatible systems built on various architectures that makes a “single” view of master data virtually impossible to create and maintain.

The compartmentalization of data

within incompatible, siloed systems

makes a “single” view of master data

virtually impossible to maintain.


Highlights

Current solutions have their limitations

In search of the elusive “single” view of their master data, organizations have implemented a number of attempted solutions, many of them focusing on the customer data piece. Unfortunately, none of these solutions has been able to provide the automated, consistently managed master data repository which has been the ultimate objective.

Customer relationship management (CRM) solutions

CRM solutions are a crucial part of many organizations’ data management toolsets. What CRM solutions were designed to do—manage specific customer-facing processes such as sales, customer service and marketing—they do very well. As a method for managing the totality of an organization’s master data, CRM solutions fall short of an effective solution. CRM solutions are reliant on the preexistence of good master data in order to be effective. CRM solutions are not designed to manage master data and customer transactions across all systems in an enterprise; they are designed to use the information they receive from other systems. Further, because CRM databases are closely tied to the CRM solution they support, these databases are not easily separated to become master data.

Current data management

solutions—including data

warehouses and customer

relationship management

solutions—were not designed

to manage master data and have

critical limitations.

Finance Procurement Production Marketing Customerservice

Distribution

In siloed organizations, individual items ofmaster data reside in multiple separate systems


HighlightsData warehouses

Data warehouses can be extremely efficient holding systems for data. Unfortu-nately, data warehouses often contain cleansed data that is used for analysis and reporting, making the warehouses a good complement to a master data manage-ment solution, rather than being the solution themselves. Current implementations of data warehouses also tend to be siloed, leading to the same data-sharing prob-lems discussed earlier. Finally, data warehouse solutions provide only limited data management capabilities and are dependent on other systems for data updates.

Transaction systems/suite

Enterprise resource planning (ERP) solutions, designed to manage specific application processes, are also consumers of master data rather than master data management solutions. They are not designed to provide access to their data from other non-ERP systems. In addition, ERP solutions can make the master data problem worse by storing data items multiple times (in each order transac-tion for a single customer, for example).

Customer information file (CIF) and operational data store (ODS) solutions

CIFs and ODSs are frequently implemented to provide better customer data to customer relationship management and other customer-facing systems. They do the job of managing master data more comprehensively than either CRM systems or data warehouses, but they still fall short of the final objective. CIFs and ODSs do not manage complete customer relationship data and cannot easily accommodate all product lines and channels. They also do not maintain new customer data such as information about relationships, interaction history and privacy preferences. Finally, CIFs and ODSs usually have view-only func-tionality, so information can be seen, but there is no service or process to allow updating of the underlying data.

Data warehouses, transaction

systems, customer information

files, and operational data stores

have their place in a comprehensive

data management solution, but they

were not designed for master

data management or enabling

a “right” view.


HighlightsAs discussed, each of the above solutions holds only a piece of the answer to the master data issue. As master data becomes ever more heterogeneous and complex, these solutions fall farther and farther behind. In particular, none of these options can manage—or even store— the unstructured data such as documents and images that are becoming an ever more critical part of day-to-day business. Further complicating the situation for many organiza-tions are the limitations inherent in IT infrastructure. Most current solutions are designed to manage low-velocity customer and product data in a single mode—either batch or online—and are not flexible enough to accommodate the dynamic master data requirements for adding new channels and sources of information.7

Master data management: the “right” view of master data

An alternative solution to today’s data management issues is surprisingly simple in concept. Organizations need to expand their thinking beyond the “single” view to find the “right” view—the right view of the right information, delivered to the right people and processes at the right time. This is what master data management (MDM) has been designed to do.

What is master data management?

Master data management describes a set of disciplines, technologies and solutions used to create and maintain consistent, complete, contextual and accurate business data for all stakeholders (users, applications, data ware-houses, processes, trading partners).

The key to master data management is “management.” Master data manage-ment does not create new data or new data silos. Rather, it provides the method by which an organization can effectively manage the data already resident in disparate systems. Master data management uses the systems already in place,

Organizations now have the option

of looking beyond the “single”

view of master data management

to find the “right” view—the right

information delivered to the right

place at the right time.


Highlightsdrawing up-to-date information from each of those systems and providing the technology and processes that automate and validate the accurate, timely dis-semination and analysis of that data across the entire enterprise.

Some of the attributes of a master data management solution include:

• Consolidationofcustomerandotherknowledgeandinsightfromexisting

silostoanenterpriselevel

• Sharingofdataacrossallsystemsasasetofcustomer-centricbusinesspro-

cessesandservices

• Commonmasterforcustomers,productsandsupplierstospeeddataentry,

retrievalandanalysis

• Supportformultipleusersofdata,includingtheabilitytolimitcertainusers’

abilitytoadd,updateorviewprocesseswhichmaintainthemasterdata

• Integrationofproductinformationmanagement,customerrelationshipman-

agement,customerdataintegrationandothersolutionsthatprovideaccess

toanalysisofmasterdata.

Because the methods and processes associated with master data management operate separately from an organization’s line-of-business and other systems, they have the ability to provide not just retrieval, updating and dissemination of data— they also address all the different uses of master data. Master data management supports operational uses by integrating data with the operational applications in real time. Master data management supports collaborative use of master data by providing an authorizing process to create, define and syn-chronize that data. Finally, master data management supports analytical use of master data by proactively pushing data to analytical applications via an event management tool.

Because a “right” view master data

management solution operates

separately from—but in conjunction

with—an organization’s other

systems, it can address all the

different uses of master data.


HighlightsMaster data management at work

With a single, integrated master data management solution, an organization can provide each of its business units with a view of master data that is up-to-date, accurate and customized to the special needs of the viewer (the right view to the right place at the right time). A call center representative, for example, can be presented with one view of the master data while the Web self-service channel is provided with another. Relevant procurement information can be automati-cally presented to the manufacturing and inventory systems dependent on this information. Marketing can measure program success by receiving tracking information that begins with the customer mailing list and continues through order processing and delivery data.

The core of a “right” multiview master data management solution is its composite application. In organizations with 30, 50 or 100+ siloed internal applications, this composite application allows the organization to collect all new product informa-tion entered in any of the siloed applications in one place, using a single process, and apply that single master process to ensure the data is complete and validated, as illustrated below.

The core of the “right” view approach

to master data management is the

composite application which facili-

tates the collection, validation and

dissemination of up-to-date master

data to and from all the organiza-

tion’s other applications.


Distribution


Distribution

New master data entry

Master data managementcomposite application

New master data entry validated and disseminated


HighlightsOnce the composite application is in place, the master data management solution can automatically send the data and automate the individual business processes required to set up the new data item in each of the separate applications.

Potential benefits can extend across the enterprise

A “right” multiview master data management solution can provide the traditional benefits of data management solutions—benefits that “single” view solutions have had difficulty in providing. These include reduced administrative and IT costs, improved data integrity and enhanced productivity.

The advantages of the “right” view approach to master data management can reverberate far beyond the data itself, however. The right view of data, delivered to the right people and processes at the right time can also help the organization realize:

• Achievementofstrategicbusinessobjectivessuchasincreasingrevenueand

customershare

• Improvedriskmanagementcapability

• Reducedmergerandacquisitiontimeandcosts

• Improvedcompliancewithprivacylegislationandotherregulations.

Is master data management the right view for your organization?

Organizations that are utilizing the “right” multiview approach to master data management are doing so because they find it helps them meet some of their most important business needs. If your organization shares any of these needs, the “right” view approach to master data management may benefit your organi-zation, as well.

• Doesyourorganizationhavemultiplefront-andback-endsystemsserving

multiplebusinessunits?

• Haveyourorganization’sbusinessdecisionsbeennegativelyaffectedbydata

managementissues?

• Hasyourorganizationexperiencedaproblemwithtrustedinformationnot

beingavailablewhenandwhereitisneeded?

A “right” view master data manage-

ment solution can provide all the

benefits of traditional data manage-

ment solutions—and the potential

for enhanced, enterprise-wide

efficiency and competitiveness.

If your organization shares these

business needs, a “right” view

master data management solution

may be appropriate.


Highlights• Aredatainflexibilitiesmakingitdifficultforyourorganizationtorespond

quicklytochangingbusinessrequirements?

• Doyoususpectthatthefullvalueoftheinformationyourorganizationholds

initsvarioussystemsisnotbeingoptimallyleveraged?

Taking the first step

Putting a master data management solution in place may seem daunting, espe-cially for larger organizations and/or those with limited IT resources. With the “right” view approach to master data management, this does not have to be the case.

At its heart, a “right” multiview solution to master data management is a busi-ness strategy, implemented via IT deliverables. Once the business strategy is in place, organizations can implement the IT enablers one domain at a time, as their overall business priorities indicate. The staged implementation process can also be coordinated with—and enhanced by—other business-driven IT initia-tives such as implementation of a service-oriented architecture.

At its core, a “right” view solution

to master data management is a

business strategy, implemented via

IT deliverables.

Future stagesStage 2

Stage 1

Administrativedata

Financialdata

Inventorydata

Supplierdata

Master data managementbusiness strategy

Customer service systemA “right” view master data management solution can be implemented gradually, in stagesthat match an organization’s overall business priorities.

For the bottom line, this staged implementation approach allows the financial impact of the new solution to be absorbed over a longer time and tied directly to specific business benefits. Staged implementation also allows an organiza-tion to see the real-world benefits of master data management more quickly.

Conclusion

Master your data, or it will continue to master you. Without a master data man-agement system in place, an organization may continue to be at the mercy of its information silos. It has been shown how “single” view solutions for master data management are often impractical to implement and limited in their scope. An attractive alternative may be the “right” view approach to master data manage-ment. This type of master data management solution does not seek to replace existing data silos with a single data view. Rather, it employs special technolo-gies and processes to break down the barriers between the data silos—allowing for optimal use of existing information, presented in the right view to the right place at the right time.

There is help available. Whether your organization is large or small, IBM can help you explore the alternatives and realize the master data management solution that is right for your organization’s goals and needs. To learn more, contact your IBM sales representative or visit:

ibm.com/cio/leverage

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ProducedintheUnitedStatesofAmerica04-07AllRightsReserved

IBMandtheIBMlogoaretrademarksorregisteredtrademarksofInternationalBusinessMachinesCorporationintheUnitedStates,othercountries,orboth.

Othercompany,productandservicenamesmaybetrademarksorservicemarksofothers.

ReferencesinthispublicationtoIBMproductsorservicesdonotimplythatIBMintendstomakethemavailableinallcountriesinwhichIBMoperates.

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